Pfandbriefe fortified against Covid

Hotel
By Bill Thornhill
20 Oct 2020

The impact of Covid-19 lockdowns on the hotel and retail loans securing German Pfandbriefe is likely to present serious challenges. But conservative lending and high interest rate coverage ratios provide solid protection, so managing a prospective rise in risk-weighted assets will likely be the bigger challenge for certain issuers, said bankers on Tuesday.

In last week’s stability review, the Bundesbank described Germany’s residential sector as stable, but expressed concern that the commercial sector would be hit, particularly certain sectors such as retail and hotels.

Low interest rates and low unemployment have supported the residential market. And with the government recently ...

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